Keep on Top of Receivables
You need cash coming in so you will have enough on hand to meet your business obligations and stay solvent. It sounds simple, but neglecting this main point has caused many businesses to fail. Set acceptable terms for payment with your customers, especially if your business is service-based or involves paying over time or on a monthly basis. Your financial institution can help you receive customer payments in the most efficient way possible, and will ensure you direct them to the right accounts to maximize your business cash flow.
Late payments are also part of any business. Work out a reasonable collection policy that will help you get the payments you need to meet your business' financial obligations without alienating your customer base. Set your receivables and payment terms upfront so you can educate new customers about them at the start of the relationship.
As your business grows, you will naturally need more inventory, which may mean more production, more storage space, and more managing of receivables. Use an inventory management system that works for your business, and use good cash management services and principles to ensure you don't end up paying for inventory you won't use. If your business is seasonal, learn how to balance production and payments so you can make it through off-season slow times intact.
Work With Your Vendors
Establish good relationships with your vendors and negotiate payment terms that work for your business. Know which payments absolutely must be made on time, such as debt payments, and which ones can be stretched a bit without causing late payment fees, loss of credit, or collection. Use your cash management strategies to ensure you always have enough money on hand in your business to take care of your obligations to creditors, suppliers, and other vendors. Renegotiate vendor contracts and revisit terms regularly to ensure you're not paying too much or losing out on more favorable terms being offered.